£8m homes left empty for years

Forget buy-to-let. London is seeing the arrival of a new breed of super-rich property speculators who are buying to sit.

As with investors who buy a second home to rent out, the buy-to-sit brigade are keen to make money from the capital's burgeoning housing market.

However, unlike those who buy to let, they can afford to allow their properties to stand empty while they wait for the values to rise.

Experts say the speculators tend to buy properties at the top end of the market, where huge profits can be made. Sales of homes worth £4m or more rose by up to 50% last year. Lulu Egerton of agents Lane Fox said: 'The super-rich acquire property in the same way as they buy fine art or fine wine - it almost turns into a kind of international collection.

'It can happen over several years. Sometimes it's no more than a whim, in other cases as families grow they move to a bigger property but the previous homes are neither sold nor let but held as assets.'

In the vanguard of the trend is Chelsea owner Roman Abramovich, who started his London property collection in 2000. The two flats in Lowndes Square he bought for £2.3m and £3m are now worth about £5m each, giving thebnaire a profit of almost £5m for doing nothing more than investing well.

When he moved to bigger premises in Chester Square in Belgravia in 2005, rather than sell up in Knightsbridge he decided to expand his stake there. In August last year, he paid about £ 10m for four more Lowndes Square flats, which are now worth about £11m. None of the flats is rented out, although they are occasionally used by Mr Abramovich's friends and visitors.

Richard Cotton, a senior partner of agents Cluttons, said there were many other wealthy individuals buying to sit. 'Dotted around London are very expensive houses owned by the superrich, which are hardly ever - if at all - occupied,' he said.

'Even when those owners and their families do come to London they mostly prefer to rent a hotel suite. Although these houses may never be lived in, the owners have no intention of selling. They have the right to hang on to what is undoubtedly a good investment but it does contribute to a real shortage of big houses at the very top of the market and does nothing to help London's housing crisis.'

Mr Cotton said buy-to-sit properties were apparent in Mayfair, Knightsbridge and The Bishop's Avenue in Hampstead, nicknamed millionaire's Row.

Ms Egerton added: 'London is still considered a safe haven - politically and financially - and the super-rich from various countries see their London property as a safe bolthole, although they may never actually spend time here. It's a vicious circle squeezing the top end of the market - anyone who can afford to hold on to their property is doing just that, while those trying to get into the market have to pay more and more.'

Daniel Wiggin of W A Ellis said: 'I have known people who bought new homes off-plan for £6m to £8m last year which are now worth £10m or more. Many have not been occupied and may never be.'

Yolande Barnes, head of research at Savills, said: 'Our latest figures show that in central London one in four of newly built properties is being bought as a pure investment, not to be let out. The buyers are clearly sufficiently confident of the future increase in capital values to make this investment decision.'

Tim Wright of Knight Frank said: 'I know of two new houses in Holland Park that were bought from developers in March last year for £8m to £9m each and then never lived in.

'Both were sold in August for £12m to £13m, so the March buyers got a fantastic return. The re-sale prices reflect the fact that the houses had not been occupied.'

'I don't plan to live in it, but I don't want to let it'

Charles Hurst, right, is the managing director of an insurance brokers and spends about two days a month in London. His wife Helen is a nurse and they have a daughter, seven, and a son, four.

Mr Hurst, who is based in Liverpool, decided to buy a London property last year. 'I saw an advertisement on the back of a property supplement for Tabard Square, a high-rise Berkeley Home project near Borough,' he said. 'It was a quick decision. Within days I bought a flat off-plan and exchanged contracts. Completion is expected in March.'

The flat is on the 18th floor of a 22-storey tower and has two bedrooms and two bathrooms. Prices in the development range from £590,000 to £800,000. Mr Hurst said he has no intention of living in the flat but may stay in it from time to time.

'It will be a sound long-term investment,' he said. 'I think the flat may have gone up in value since I bought it and there are only two left for sale out of 52. I am hoping it will double in value over the next six to 10 years. If all goes to plan I would rather not have to let it - I am not interested in being a landlord.

'I also think it would be a good idea if the flat stays in as pristine a condition as possible, so I may not even use it as a pied-a-terre or for family holidays in London. On the other hand, I am not an oligarch and it is comforting to know that I can always let it if necessary. If my forecast is correct, it should do nicely as a nest egg for the future.'